Opinion
No. 602039–15.
02-22-2016
BLUMENFELD DEVELOPMENT GROUP, LTD, Plaintiff, v. FOREST CITY RATNER COMPANIES, LLC, Forest City Enterprises Inc., and Bruce Ratner, Defendants. and Nassau Events Center, LLC, Nominal Defendant.
Ronald Rosenberg, Esq., Garden City, Plaintiff's Attorney. Steven Cohn, Esq., Carle Place, Defendant's Attorney. Harold Weinberger, Esq., New York, Defendant's Attorney.
Ronald Rosenberg, Esq., Garden City, Plaintiff's Attorney.
Steven Cohn, Esq., Carle Place, Defendant's Attorney.
Harold Weinberger, Esq., New York, Defendant's Attorney.
Vito M. DeStefano, J.
The Defendants Forest City Ratner Companies, LLC, Forest City Enterprises, Inc., and Bruce Ratner and nominal Defendant Nassau Events Center, LLC, move for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the complaint.
Background
In March of 2013, the County of Nassau (the “County”) issued a “Request for Proposals” (“RFP”) by which it solicited proposals from potential bidders interested in redeveloping the site of the Nassau County Veterans Memorial Coliseum (the “Coliseum”) (Complaint at ¶¶ 26–28). The proposed redevelopment project was to include three key components, namely, redevelopment of the arena space, development of certain retail space, and the anticipated development of future space (Complaint at ¶ 30).
In May of 2013, several entities submitted proposals in response to the County's RFP, including the Plaintiff, Blumenfeld Development Group, Ltd (“BDG”), a local real estate company headquartered in Nassau County (Complaint at ¶¶ 6–8, 16–17, 31). A competing proposal was submitted by nominal Defendant Nassau Events Center, LLC (“NEC”). NEC was a company created by Defendants Forest City Ratner Companies, LLC (“FCRC”), Forest City Enterprises, Inc. (“FCE”) (collectively referred to as “Forest City”) and its owner, Defendant Bruce Ratner, for the purposes of submitting the Nassau Coliseum bid (Complaint at ¶ 28). According to the verified complaint, Bruce Ratner and BDG's principal, Edward Blumenfeld, previously worked together for many years as partners and/or joint venturers on a previous New York City development project known as the “East River Plaza Project” (Complaint at ¶¶ 18–24).
After the Coliseum bids were submitted and considered, NEC was selected by the County as one of two finalists for the proposal (Complaint at ¶¶ 32–33). According to the complaint, in July 2013, two days after the County's bid announcement was made, Ratner personally contacted Blumenfeld and asked him (and BDG) to partner with Ratner and NEC for the purposes of preparing and submitting a final bid to the County, which bid was due the following month (Complaint at ¶¶ 35–36). BDG claims that Ratner believed that having a well-known, Nassau County-based developer like BDG on board as partner would “immeasurably” enhance NEC's chances of ultimately being selected as project developer given BDG's history of performing major development projects on Long Island (Complaint at ¶¶ 8, 37–38, 42, 50).
The complaint further alleges that during a conference call and subsequent dinner meeting between Blumenfeld and Ratner held on July 15, 2013, a joint venture agreement was struck and key contract terms were orally agreed upon. More specifically, those terms were, in substance, that the alleged BDG/NEC oral joint venture would submit a proposal “under the umbrella of NEC as bidder”; BDG and Forest City would be “50/50 partners” in the project's retail and future development; BDG would have an option to purchase a 5% interest in the arena space; BDG would contribute capital on a 50/50 basis with respect to the retail and future development space; BDG would be a member of NEC and other separately formed, NEC-related entities to be created later; and the newly formed joint venture would operate on essentially the same basic framework which governed the parties' earlier joint venture involving the East River Plaza project (Complaint at ¶¶ 38–42).
According to the complaint, the joint venture was to operate “on essentially the same basis as the Tiago Holdings Operating Agreement which governed their [East River Plaza Project] concerning the sharing of profits and losses and related matters” (Complaint at ¶ 40).
On July 17, 2013, BDG, NEC, and Forest City issued a press release allegedly announcing and confirming the joint venture. Among other things, the press release recounted that “Blumenfeld will be assisting us in the development of restaurants and retail” and further advised that “Ed [Blumenfeld] and his company bring decades of Long Island development experiences and will have a great impact on the retail component of our proposal. We're thrilled to have Ed join our formidable partnership group .... (Complaint at ¶ 42).
Relatedly, the complaint avers that on July 18, 2013—and in order to ensure that the public and the County selection committee were aware of BDG's involvement—Ratner placed an advertisement in Newsday touting BDG's newly agreed upon role in the project and declaring in part that “the best partnership for Long Island just got better” (Complaint at ¶ 43).
As part of the final bid submissions, the two finalists were required to “negotiate and execute a form of Lease Agreement prepared by the County .... “ In August of 2013, Ratner, as chairperson of NEC, signed the proposed lease, which named NEC as tenant and the County as landlord. In accord with an attached schedule “F” to the lease, BDG was identified as a “proposed member and owner” of NEC (Complaint at ¶¶ 50–56).
Although schedule “F” annexed to the lease describes BDG as a “proposed” member of NEC, section 55.2[d][ii] of the lease provides that “schedule F attached hereto correctly sets forth the identity of the members of Tenant [NEC] and the holders of direct equity interests in such partners, which may be updated based on changes that arise from transfers permitted under section 19.11 or otherwise in accordance with this Lease and/or with Landlord's reasonable approval”.
Thereafter, on August 15, 2013, the County announced that NEC was the successful bidder for the Nassau Coliseum redevelopment project and a news conference was held at which both Blumenfeld and Ratner appeared and spoke—allegedly as joint venturers. BDG claims that it subsequently continued its involvement in the project as a team member and expended significant time, resources and money in furthering the project's objectives (Complaint at ¶¶ 60–62, 65–87).
In August of 2014, after a year of joint effort, the parties executed a “Proposed Nassau Veterans Coliseum Joint Venture Memorandum of Understanding” (the “MOU”) which, among other things, memorialized the parties' intent to draft a formal written joint venture agreement (“JV Agreement”) under which BDG would, inter alia, acquire a 50% equity interest in the retail space surrounding the Coliseum (Complaint at ¶¶ 88–90).
The proposed joint venture agreement was to be based, in part, upon the “form of the Tiago Holdings, LLC operating agreement” previously used by the parties when they jointly developed the East River Plaza Project years earlier (MOU at § III).
The MOU's introductory section recites that NEC, Forest City, and BDG have been chosen as the “successful respondent” to the County's RFP, that NEC has executed a lease agreement with the County for the redevelopment of the Coliseum, and that:
BDG and NEC have had discussions with respect to the development of the Coliseum Site generally, and more specifically with regards to the Retail Space and Future Development Space, through the joint ownership among NEC/FCRC and BDG of a special purpose limited liability company that will develop, lease and operate the Retail Space and Future Development Space (such entity is sometimes referred to herein as the “NEC Retail LLC”). NEC, BDG and FCRC are collectively referred to herein as the “parties”.
Other relevant provisions of the MOU include:
I.B. This binding Memorandum of Understanding (“MOU”) contains the current thinking with respect to primary business terms contemplated to be contained in a long-form joint venture agreement between NEC/FCRC and BDG, and other provisions respecting governance, restrictions on transfer, as well as customary representations, warranties and covenants, in part as set forth below or as the parties may otherwise agree, with respect to their ownership in the NEC Retail LLC and the development, leasing and operation of the Retail Space and Future Development Space only (the “JV Agreement ”). The parties are bound by the obligations and the payment/funding requirements herein, and the parties agree to execute a mutually satisfactory JV Agreement within thirty (30) days of the date of this MOU. The parties hereby agree to negotiate in good faith the terms of the JV Agreement consistent with the terms of this MOU, and shall use their good faith efforts to negotiate and enter into the JV Agreement; provided however, there shall be no liability between the parties for failure of the JV Agreement to be executed for any reason.
* * *
I.E. In the event that the Parties have not entered into a JV Agreement on or before Monday, September 30, 2014, this MOU shall expire and be of no further force and effect, and to the extent the JV Agreement is executed on or before September 30, 2014, then the terms of the JV Agreement shall supersede and replace this MOU.
* * *
V. (b) Merger Clause. This MOU, together with all other agreements which either are referred to herein, contain all of the understandings and agreements of whatsoever kind and nature existing between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings with respect thereto (emphasis in original).
In accord with section II of the MOU, BDG made a $425,751 “catch up” payment to NEC—although BDG was entitled to a refund of all payments made pursuant to the MOU in the event that a JV agreement was not timely executed (MOU §§ II[6] [B] and II[6][B][1] ).
The remainder of the MOU contains a series of terms and conditions defining the parties' rights and obligations with respect to a broad range of issues impacting upon the retail development of the Coliseum site.
Forest City circulated a draft JV Agreement on November 12, 2014, two days prior to the extended November 14, 2014 deadline (Complaint at ¶ 111). Although the JV Agreement was not executed by the November 14, 2014 deadline, the “parties continued to act in furtherance of the Joint Venture after the MOU deadline date had passed” (Complaint at ¶ 112).
On September 23, 2014, NEC and BDG executed a letter agreement extending the deadline for execution of the JV Agreement until November 14, 2014 (Ex. “C” to Affirmation in Support).
According to the complaint, after the MOU was executed, the parties continued their cooperative efforts in furtherance of the project including BDG's allegedly locating valuable, prospective tenants to lease the retail space (Complaint at ¶¶ 96, 104–110).
Towards the end of 2014, however, a rift developed between Ratner and Blumenfeld with respect to BDG's continued participation in the project. BDG claims that as a consequence, Ratner allegedly and wrongfully decided that “he wanted sole control and decision-making authority over the Coliseum project” and, thereafter, demanded that BDG cease all contact with the major players in the transaction (Complaint at ¶¶ 126–128).
At a subsequent dinner meeting held in January of 2015, and attended by both Blumenfeld and Ratner, Ratner allegedly insisted that he now wanted the entities he owned to control all aspects of the project's development without any interference or input from BDG (Complaint at ¶ 141).
By letter dated March 5, 2015, Ratner notified BDG that it was refunding its catch-up contribution (MOU at § II(6)(B)(1); Ex. “E” to Affirmation in Support).
Pursuant to section 11(6)(B)(1), “[i]n the event the JV Agreement is not executed on or before September 30, 2014 (and assuming no extensions have been mutually agreed to), then FCRC shall refund to BDG (within 30 days) all payments made by BDG pursuant to the terms of this MOU”.
Subsequent attempts by BDG to mend the rift which had developed failed, and Ratner later commenced a lawsuit against BDG which, according to BDG, contains a series of false statements relating to the manner in which the parties' relationship had deteriorated (Complaint at ¶¶ 149–169).
Nassau Events Center, LLC v. Blumenfeld Development Group, Ltd. (Index No. 601941/15) was commenced on March 26, 2015 in the Supreme Court, Nassau County (the “NEC Action”) (Ex. “F” to Affirmation in Opposition).
BDG thereafter commenced the instant action a few days after the NEC Action was instituted. The instant verified complaint, dated March 31, 2015, is principally based upon the theory that the Defendants collectively breached an alleged oral joint venture agreement which BDG claims arose in July of 2013 (Complaint at ¶¶ 38–41, 172–179).
The complaint seeks declaratory relief in the first cause of action and asserts additional causes of action sounding in breach of contract, breach of fiduciary duty (both individually and derivatively on behalf of Defendant NEC), and tortious interference with contract.
The Defendants move for an order pursuant to CPLR 3211(a)(1) and (7) dismissing BDG's verified complaint.
For the reasons that follow, the motion is granted in part and denied in part.
The Court's Determination
Declaratory Relief and Breach of Contract
(First and Second Causes of Action )
In the first cause of action, BDG alleges its entitlement to declaratory and injunctive relief, as well as monetary damages. Specifically, and in pertinent part, the complaint demands declaratory relief recognizing, inter alia, BDG's contract rights pursuant to the July 2013 oral joint venture agreement which, allegedly, predated and survived the parties' failed efforts to create a new JV Agreement pursuant to the MOU; namely, rights recognizing BDG's status as a 50% owner in the project's “retail” and “future” space; its ownership interest in the “arena space”; and its right to exercise joint, decision-making authority with respect to the development of those space categories (Complaint at Wherefore Clause ¶ [ii] ).
Liberally construing and accepting the facts alleged as true, and according BDG the benefit of every possible favorable inference (Sokol v. Leader, 74 AD3d 1180, 1181 [2010] ; Leon v. Martinez, 84 N.Y.2d 83, 87 [1984] ) the court finds that the complaint pleads the existence of an oral joint venture between the parties (see Clarke v. Sky Express, Inc., 118 AD3d 935, 936 [2d Dept 2014] ; Ackerman v. Landes, 112 A.D.2d 1081, 1082 [2d Dept 1985] ). “The essential elements of a joint venture are an agreement manifesting the intent of the parties to be associated as joint venturers, a contribution by the coventurers to the joint undertaking (i.e., a combination of property, financial resources, effort, skill or knowledge), some degree of joint proprietorship and control over the enterprise, and a provision for the sharing of profits and losses” (Commander Terminals Holdings, LLC v. Poznanski, 84 AD3d 1005, 1009 [2d Dept 2011] [internal quotation marks omitted]; see also Mendelovitz v. Cohen, 66 AD3d 849 [2d Dept 2009] ).
“An oral agreement may be sufficient to create a joint venture relationship” and the “intent of the parties to form a joint venture may be implied from the totality of their conduct” (Schultz v. Sayada, 133 AD3d 1015, 1016 [3d Dept 2015] ; Mendelovitz v. Cohen, 66 AD3d at 850, supra ; Foster v. Kovner, 44 AD3d 23, 27 [1st Dept 2007] ). The Statute of Frauds is generally inapplicable to an oral joint venture agreement (Mendelovitz v. Cohen, 66 AD3d at 850, supra ; Foster v. Kovner, 44 AD3d at 27, supra ). “This is because, absent any definite term of duration, an oral agreement to form a partnership or joint venture for an indefinite period creates a partnership or joint venture at will” (Foster v. Kovner, 44 AD3d at 27, supra; see also Gelman v. Buehler, 20 NY3d 534, 537–538 [2013] ; LoGerfo v. Trustees of Columbia Univ. in City of NY, 35 AD3d 395, 396–397 [2d Dept 2006] ).
Nevertheless, where a joint venture has for its object the completion of a specified piece of work or the effecting of a specified result—as it allegedly does here—it will be presumed that the parties intended the relation to continue until the object has been accomplished (Gelman v. Buehler, 20 NY3d at 537–538, supra; Hooker Chems. & Plastics Corp. v. International Mins. & Chem. Corp., 90 A.D.2d 991, 992 [4th Dept 1982] ). Relatedly, “where the object of the joint venture agreement contemplates the completion of a specified result or piece of work, a breach which occurs prior to the completion of this goal is actionable notwithstanding the absence of a definite term fixing the duration of the agreement” (Mendelovitz v. Cohen, 2008 WL 4277257, at 8 [Supreme Court, Kings County 2008] aff'd 66 AD3d 849 ). “Whether the relationship is at will or for a fixed term or until the accomplishment of a particular undertaking is a question of fact” (Hooker Chems. & Plastics Corp. v. International Mins. & Chem. Corp., 90 A.D.2d at 992, supra; see also Haines v. City of New York, 41 N.Y.2d 769, 772 [1994] ).
Here, the verified complaint contains detailed factual allegations describing, inter alia, the parties' extensive, joint activities and cooperate efforts, as well as the claimed terms of the joint venture—including allegations of shared losses and profits (Complaint at ¶¶ 38–41). Although merely “calling an organization a partnership” does not, without more, “make it one” (Brodsky v. Stadlen, 138 A.D.2d 662, 663 [2d Dept 1998] ), here, and at least as alleged in the complaint, Defendants' public statements were extensive. For example, the complaint alleges that Ratner himself repeatedly made public and private statements in which he affirmatively touted BDG as a highly valued “partner” in the Coliseum enterprise, literally stating on one occasion that the Defendants were “thrilled” at the prospect of partnering with BDG in the project (Complaint at ¶¶ 42–45). Additionally, the MOU discusses how NEC and BDG were both “chosen as the successful respondent” for the redevelopment of the Nassau Coliseum.
According these facts and others alleged by BDG the benefit of every possible favorable inference (see Sokol v. Leader, 74 AD3d at 1181, supra ; Leon v. Martinez, 84 N.Y.2d at 87, supra ), the court finds that “the complaint sufficiently states a cause of action for breach of a joint venture agreement by alleging acts manifesting the intent of the parties to be associated a joint venturers, mutual contribution to the joint undertaking through a combination of property, financial resources, effort, skill or knowledge, a measure of joint proprietorship and control over the enterprise, and a provision for the sharing of profits and losses' “ (Art and Fashion Group Corp. v. Cyclops Prod., Inc., 120 AD3d 436, 437–438 [1st Dept 2014] quoting Richbell Info. Servs. v. Jupiter Partners, 309 A.D.2d 288, 298 [1st Dept 2003] ). Notably, “[a] dispute between two or more persons as to the existence of an oral partnership agreement generally presents issues of fact ....“ (Lynn v. Corcoran, 219 A.D.2d 698, 699 [2d Dept 1995] ; see also RCR Bldrs. v. Batex Contr. Corp., 230 A.D.2d 897, 898 [2d Dept 1996] ).
The Defendants argue for the first time in reply that if the oral agreement was not terminable at will, then it is must necessarily be barred as a matter of law by the Statute of Frauds, i.e., as incapable of completion within one year (Memorandum of Law in Reply at p 10–11). In this regard, BDG has alleged that the doctrine of part performance is sufficient to otherwise remove its oral joint venture claim from the Statute of Frauds (Memorandum of Law in Opposition at p 13, fn 6)—an argument which the Defendants have not addressed in their subsequently filed reply submissions.
In support of their motion, the Defendants argue that several provisions of the MOU disprove any allegation that the parties entered into an oral joint venture agreement in July 2013 because “[o]n its face, the MOU is totally at odds with Plaintiff's allegation that the parties already were partners in a joint venture, let alone that BDG ever became a member or owner of NEC, an entity that FCRC formed months before BDG claims the parties' supposed joint venture began” (Memorandum of Law in Support at pp 13, 17).
For example, section I.B. of the MOU states that “there shall be no liability between the parties for failure of the JV Agreement to be executed for any reason”. According to the Defendants, “[i]f the parties were, in fact, already subject to a binding joint venture agreement with respect to the redevelopment of the Nassau Coliseum Site, it would have been unnecessary and even illogical for them to agree to a provision disclaiming liability for failure to agree on and enter into a joint venture covering that same subject” (Memorandum of Law in Support at pp 17–18).
While the MOU provides that there would be no liability in the event the proposed JV Agreement was not timely “executed,” and that the MOU would then expire (MOU § I[B],[E] ), nowhere does it specifically state that the failure to timely execute the proposed JV Agreement would result in anything more than the expiration of the proposals contained in the MOU itself. There is no language in the MOU providing for the termination of any rights or agreements the parties may have had prior to the execution of the MOU. If, in fact, the parties truly intended to excise BDG from all further involvement from the Coliseum project upon the failure to execute a written JV Agreement, they presumably would have stated as much in the MOU (see generally Ashwood Capital, Inc. v. OTG Mgt., Inc., 99 AD3d 1, 7–9 [1st Dept 2012] ). It is settled that “courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include' “ (Vermont Teddy Bear Co. v. 538 Madison Realty Company, 1 NY3d 470, 475 [2004], quoting Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 72 [1978] ), and this is particularly so where, as here, the disputed contract has been negotiated at arms' length by sophisticated, counseled businesspeople (Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 NY3d 398, 403–404 [ 2009] ; Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d at 475, supra; Bank of New York Mellon v. WMC Mortgage, LLC, —AD3d_, & mdash, 2015 WL 7729050 [1st Dept 2015] ).
The court also notes that, according to the complaint, the parties continued to conduct themselves as if they were working jointly on the Nassau Coliseum project for a period of time afer the deadline execution date of November 14, 2014 (Complaint at ¶¶ 112–124).
Defendants similarly argue that the “MOU expressly contemplated that the parties had not yet entered and might never enter into a joint venture” with respect to the redevelopment of the Nassau Coliseum given section II.6.B.1 of the MOU which provided for the refund of any capital contribution made by BDG if the parties failed to execute a JV Agreement by September 30, 2014. According to the Defendants, if the parties were already operating pursuant to a joint venture when they executed the MOU, “there would have been no reason for them to provide for such repayment terms” (Memorandum of Law in Support at p 18). However, the MOU fails to set forth that any prior agreements between the parties would be terminated in the event BDG received a return of its capital contribution. As noted above, it is not for the courts to “interpret an agreement as impliedly stating something which the parties have neglected to specifically include” (Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d at 475, supra ).
Defendants nevertheless argue that even if an oral joint venture agreement existed, the MOU superseded all prior agreements and understandings to the extent that, once the MOU expired, any and all contractual relationships which may have previously existed were terminated as a matter of law. In support of this argument, the Defendants rely upon, inter alia, section V.(b) of the MOU, which states that “[t]his MOU, together with all other agreements which either referred to herein, contain all of the understandings and agreements of whatsoever kind and nature existing between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertaking with respect thereto” (emphasis added).
The use of the correlative conjunction “either,” in section V. [b] implies that it will be followed by the disjunctive term “or”, together with an additional disjunctive phrase—but there is no ensuing “or” phrase included in the merger clause. It is unclear whether the inclusion of the word “either” in the merger clause was a scrivener's error, or precisely what meaning, if any, the term was intended to convey. Under the traditional rules of contract law, the courts will enforce only those merger clauses that are clear and unambiguous (Friedman v. Ocean Dreams, LLC, 56 AD3d 719 [2d Dept 2008] ).
“It is well settled that where the parties have clearly expressed or manifested their intention that a subsequent agreement supersede or substitute for an old agreement, the subsequent agreement extinguishes the old one and the remedy for any breach thereof is to sue on the superseding agreement' “ (Northville Indus. Corp. v. Fort Neck Oil Terms. Corp., 100 A.D.2d 865, 867 [2d Dept 1984] aff'd 64 N.Y.2d 930 [1985] ; see also Citigifts, Inc. v. Pechnik, 67 N.Y.2d 774, 775 [1986] ; Madey v. Carman, 51 AD3d 985, 986 [2d Dept 2008] ). However, “the fact that a subsequent contract contains provisions which are of the same subject matter as those in an earlier agreement is not sufficient to supersede the entire contract; rather, a subsequent agreement supersedes only those terms of the earlier contract that are of the same subject matter” (CreditSights Inc. v. Ciasullo, 2007 WL 943352, at *6 [SDNY 2007] ; see also Globe Food Servs. Corp. v. Consolidated Edison Co. of NY, 184 A.D.2d 278, 279 [1st Dept 1992] ).
In general, “[t]o determine if a particular provision is superseded by a provision in a subsequent contract, the court considers: (1) whether there is an integration and merger clause that explicitly indicates that the prior provision is superseded; (2) whether the two provisions have the same general purpose or address the same general rights; and (3) whether the two provisions can coexist or work in tandem” (Long Side Ventures, LLC v. Adarna Energy Corporation, 2014 WL 4746026, at *6 [SDNY 2014] quoting A & E Television Networks, LLC v. Pivot Point Entertainment, LLC, No. 10, 2013 WL 1245453, at *10 [SDNY 2013] ).
“Whether a discharge is effected depends on the intention of the parties, deduced from the documents and the circumstances of their execution' “ (Globe Food Servs. Corp. v. Consolidated Edison Co. of NY, 184 A.D.2d at 279, supra, quoting Mallad Constr. Corp. v. County Fed. Sav. & Loan Assn., 32 N.Y.2d 292 [1973] ). In sum, the cases indicate that whether a subsequent agreement is superseding is fact-driven and sui generis in nature, hinging in part upon the unique interplay of circumstances surrounding the execution of the disputed agreements.
Contrary to the Defendants' contention, although the MOU addresses the same or similar subject matter as the alleged oral joint venture agreement, the parties' intentions “at this CPLR 3211 motion stage” are unclear (Held v. Kaufman, 91 N.Y.2d 425, 433 [1998] ; Globe Food Servs. Corp. v. Consolidated Edison Co. of NY, 184 A.D.2d at 279, supra ). Notwithstanding the merger clause relied on by the Defendants, it is unclear whether the contemplated JV Agreement was actually intended to terminate the alleged oral joint venture agreement and all prior agreements, or whether, instead, the MOU represented an effort by the parties to modify their prior legal relationship—without necessarily terminating that relationship in the event that the proposed modification could not be satisfactorily agreed upon. “The fact that a subsequent contract contains provisions which are of the same subject matter as those in an earlier agreement is not sufficient to supersede the entire contract” (CreditSights Inc. v. Ciasullo, 2007 WL 943352, at *6, supra ). Here, unlike other merger clauses, the merger clause in the MOU does not state that it was intended to supersede any and all prior arrangements-contractual or otherwise (Globe Food Servs. Corp. v. Consolidated Edison Co. of NY, 184 A.D.2d at 279, supra ; Marsh v. Cabrini Med. Ctr., 2009 WL 1726331, at *3 [SDNY 2009] ).
More specifically, the result advanced by the Defendants is contrary to events and circumstances depicted in the verified complaint. Favorably construing those events, the facts are inconsistent with the inference that, after jointly investing significant time and resources to the project for almost a year, the parties would simply agree—without explanatory comment in the MOU—to sever their relationship if the JV Agreement could not be executed by a certain date. In this regard, there is nothing in the MOU which addresses the potential termination of BDG's prior status in the project, much less anything which expressly acknowledges that BDG's involvement in the project as a publicly touted, high-profile participant would come to a complete halt.
Under these circumstances, the branches of the Defendants' motion seeking dismissal of the first and second causes of action is denied.
Breach of Fiduciary Duty
(Third and Fourth Causes of Action )
The third and fourth causes of action are direct and derivative (on behalf of NEC) breach of fiduciary duty claims, respectively. In the third cause of action, BDG alleges that the parties were joint venturers; that by virtue of that relationship, the Defendants owed BDG a fiduciary duty to act in NEC's best interests; but that instead, the Defendants engaged in wrongful conduct (referenced previously) which damaged BDG's financial interest in the alleged joint venture and its “reputation in the local and the real estate communities” (Complaint at ¶¶ 183–186).
This fiduciary duty claim must be dismissed as duplicative of the breach of contract claim inasmuch as the theories of both causes of action are effectively premised upon the same underlying facts and seek similar damages (Mawere v. Landau, 130 AD3d 986, 990 [2d Dept 2015] ; Canzona v. Atanasio, 118 AD3d 841, 843 [2d Dept 2014] ).
The fourth cause of action is also a breach of fiduciary duty claim, albeit one brought derivatively on behalf of nominal Defendant NEC. According to the complaint, FCRE, FCE and Ratner breached their fiduciary duties to NEC by excluding BDG from the joint venture and by making business decisions that were not in the best interests of NEC but, rather, were made to further the Defendants' personal interests and agenda (Complaint at ¶¶ 187–192).
The Defendants allege that the derivative breach of fiduciary duty claim must be dismissed “because BDG is not a member of NEC and thus may not assert a derivative claim on behalf of that entity” (Memorandum of Law in Support at p 22). According to the Defendants, BDG was never truly a member of NEC—only a “proposed” member as described in schedule “F” of the NEC–Nassau County Lease (Memorandum of Law in Support at fn 2, pp 21–22).
Upon the documents submitted, the Defendants' submissions have not utterly refuted the fact that BDG is a member of NEC-a necessary component for any derivative claim (Tzolis v. Wolff, 10 NY3d 100, 107–109 [2008] [members of LLCs may sue derivatively]; Cohen PDC, LLC v. Cheslock–Bakker Opportunity Fund, LP., 2010 WL 4530242 aff'd 94 AD3d 539 [1st Dept 2012] ).
In support of their arguments concerning standing, the Defendants do not refer to NEC's governing, management documents, i.e., its articles of organization or operating agreement, etc., or other internal documents filed in connection with its creation, which might list or identify precisely what entities or individuals constitute its members; rather, the document primarily relied on by the Defendants is schedule “F” annexed to NEC's lease with the County. While schedule “F” describes BDG as a “proposed” member, the lease itself does not contain any qualifying reference describing the entities listed on the attachment as “proposed” members. To the contrary, the lease states that “Schedule F attached hereto correctly sets forth the identity of the members of [NEC] and the holders of the direct equity interests in such partners, which may be updated based on changes that arise from transfers permitted under Section 19.11 or otherwise in accordance with this Lease and/or with Landlord's reasonable approval” (see Ex. “A” to Motion at § 55.2[d][ii] ).
In any event, the court is unpersuaded that a lease executed by a limited liability company represents a document conclusively establishing the identity of its members (CPLR 3211[a][1] ). Furthermore, and liberally construed, the complaint's factual averments allege membership status in NEC, sufficient for the purposes of defeating the Defendants' motion at this juncture.
Tortious Interference with the Contract
(Fifth Cause of Action )
The fifth cause of action alleges that the Forest City Defendants and Bruce Ratner have tortiously interfered with and/or breached the oral joint venture agreement by wrongfully excluding BDG from the venture's operations and decision making processes for personal gain (Complaint at ¶¶ 197–200).
The Defendants contend that this claim must be dismissed because BDG does not identify the breach of a “valid contract”, an essential element of a claim for tortious interference with contract (see Lama Holding Co. v. Smith Barney, Inc., 88 N.Y.2d 413, 424 [1996] ). The Defendants' argument with respect to this claim, however, is based on the theory that there was no oral joint venture agreement or that the MOU superseded any alleged oral agreement-theories which the court has already rejected at this pre-answer stage (see discussion supra at pp 7–11). Accordingly, that branch of the motion seeking dismissal of the fifth cause of action is denied.
According to the Defendants, “the only purported contract that BDG identifies as support for its tortious interference claim is the parties' alleged oral joint venture agreement from July 2013” and, “even assuming that such an agreement ever existed, the parties' August 2014 MOU superseded and extinguished it, and it thus ceased to exist well before any alleged interference or breach” (Memorandum of Law in Support at p 23).
Conclusion
Based on the foregoing, it is hereby
Ordered that the motion by the Defendants for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the complaint is denied, except for the third cause of action, which is dismissed.
This constitutes the decision and order of the court.